There is a lot of chatter going on right now about the state of the real estate market. After interest rates started to climb, we have seen a lot of speculation about what will happen. It’s important to be able to discern between facts and opinions. In today’s world where anyone can have a platform and pretend to be an expert, we need to make sure we are getting information from credible sources. You will find that most credible sources don’t speak in absolutes whereas the want to be experts do. If someone is telling you not to buy a house right now, they aren’t doing you any favors because there is much more to the story than they are telling you. Also, make sure you are getting your information from a local source i.e., an agent that has knowledge of the area that you live in or want to live in. Many of the real estate trends that you need to be concerned with are local and not national.
Working in the greater Sacramento area, I can tell you that local can even mean neighborhood specific. There are markets in Sacramento that are still getting several offers on properties if the properties are priced correctly. To navigate this, you need an agent who can guide you through the process.
The Sacramento real estate market, like many markets throughout the country, has been extremely hot for the past couple of years. We have seen record increases in value and a large pool of buyers looking to purchase. One of the main drivers of the price increases has been lack of inventory. Over that same time period, we have had less than a month’s supply of inventory. Low supply and high demand are the drivers of sellers getting multiple offers on their homes.
Interest rate increases have priced some buyers out of the market. If you can still afford to buy, I would encourage you to do so. All the experts are saying that interest rates are going to continue to climb. With less buyers looking, you won’t find your offer drowned out by 10 others. Many buyers are able to negotiate repairs being done by sellers which wasn’t happening two months ago. The market is still very competitive, just not on fire competitive like it was.
I know a lot of people get hung up on mortgage rates now vs. earlier this year. To put some historical perspective on them, rates are currently just over 5%. The historic average interest rate is 8%.
We all know people who say they are waiting for home values to drop before they purchase. I personally know people who have been waiting for over 7 years. In those 7 years, they have been completely priced out of the market. Inventory is the driver of value and we don’t see enough inventory in the future to really put a damper on cost. Having lived through the great recession, I know that many people fear the market tanking and prices dropping dramatically. Luckily, there were restrictions put on lending that will help safeguard that from happening again.
If you are thinking of selling your home and fear you missed your opportunity, I would tell you, it is still a great time to sell. Homes are still garnering offers and selling quickly if they are priced correctly. You might not get offers at $20k over asking price but realize, a good agent will value your home at the current market value. Don’t underprice expecting a bidding war. The market has shifted enough that buyers are more price conscious now. I’ve heard horror stories of sellers getting offers at or even above their asking price and they are wanting to counter them for even more money.
Sellers, don’t be fooled by all of the companies out there that promise to sell your home for less than the competition. In real estate, you get what you pay for. You want an agent that knows the market and will work hard to get your property sold. At Stocker and Watts, we believe in quality over quantity. We want to make sure we are always giving our clients the best possible service.
The bottom line is this. The market has shifted but is still a competitive market. If you are thinking of buying or selling, talk to a real estate professional. Find someone who knows the local market.
As always, please feel free to reach out if you have any real estate questions.
Real Estate Reinvented